Financial market research and analysis

European stocks look set to open lower on Friday following a mixed session in Asia and another record close on Wall Street. Reports that special Council Muller has appointment a grand jury to investigate Russia’s election interference is more bad news for the Trump fiscal agenda. No dramatic market moves are likely ahead of the widely-watched US employment report.

 

The FTSE looks set to pullback from gains thanks to a drop in the British pound following the Bank of England’s decision to keep rates at record lows. So far the impact of a weaker currency to boost foreign earnings has trumped the prospect of lower UK economic growth. The Bank of England’s forecast that inflation should top out at 3% means there is no desperate need for a rate hike, but it also means the cost of living squeeze on UK households may be limited, provided wage growth holds up.

 

Royal Bank of Scotland has reported its first half-year profit in 3yrs but is projecting an annual loss because of litigations costs. Litigation costs preventing profitability means RBS will still be government owned for a long while yet. No extra provision for PPI this quarter is a clear differentiator from other UK lenders and could be a good sign for 2018.

 

The US is expected to have created 183k jobs in July, a slight slowdown from the 222k in June. A positive surprise would be welcome for the greenback which has been battered by contracting US-German yield spreads. Still even another strong month of jobs gains won’t be enough to put the Trump reflation trade back on the agenda.